Thanks to you all for reading and commenting throughout 2008. Without your comments this blog would not be half of what it is; without your visits....
Hope you all make it into the New Year safe and well.
Look forward to seeing you back in what is going to be a rollcoaster of a year; 2009
Wednesday, 31 December 2008
Tuesday, 30 December 2008
Went to renew my monthly season ticket today and asked what the price changes will be from Jan 1st. Up from £109 to £122; only an 11% rise then.
Luckily inflation is falling so rapidly that the Bank of England can reduce rates down to 0% in the next couple of months.
As this small anecdote shows, there is clearly no rise in prices at all at the moment in any sector, hence the ability to reduce rates to 0%.
I wonder what my company will say if I ask for a salary increase to match these increases....
Monday, 29 December 2008
The UK markets opened at 8am today and so do we here at Capitalists@Work. Hope you have all had a nice little break and are fully re-charged to face the interesting times that will be 2009.
If you thought 2008 was interesting, wait until you get a load of next year.
Still, with Christmas cheer still fresh in the memory, let's try not to laugh at those less fortunate:
Here is a story about Ski Chalet owners in Chamonix, ruined by the collapse in the Pound (the one that the Government keeps denying). Poor dear, it appears one man in the story may have to cut his price and only make 100% profit in 7 years. Let's hope the slopes of Chamonix don't give him a bad break.
Then here too is a report on Gold. All the Gold bugs are saying 2009 will be a Golden year. Much as I am one, let's hope not. if Gold rises it means there are massive problems in the world. Today for example, the rise in Gold can be measured in the number of causalities of war. Nice bunch of optimists to hang with those Goldbugs.
Finally, spare a thought for Russia. The crowning glory of Democracy since 1991. Forced to devalue the Ruble yet again as the oil price crashes. Russia has burnt through 33% if its huge reserves of cash in 3 months. We can only hope President Medvedev can pull through and still maintain support to win future elections....
Wednesday, 24 December 2008
Festive fun. What's your prediction?
What’s your view on
1} Will RBS survive intact during 2009
A] Yes. Totally
B] It will need to merge with another institution
C] It will be taken into “Temporary public ownership”
D] No. It will collapse and many, many branches will close
2} Will 2009 see..
A] A short downturn with a recovery by April
B] A serious slowdown but recovery by September
C] A recession, deepening until at least November
D] A Depression, with no sign of recovery by 2010
3} Will the unemployment figures in 2009..
A] Never top 1.5 million
B] Steady at 2 million
C] reach 3 million
D] Exceed 3.5 million
4} There will be a
A] in spring 2009
B[ In Summer/Autumn 2009
C] In Summer 2010
D] There will be no more
5} Barak Obama will successfully
A] stabilise the
B] Take over the toxic debt from the
C] Improve relations with the UN
D] None of the above
A] show a 10% gain by 2010
B] fall 5-10% by 2010
C] Fall 15-20% by 2010
D] Fall by more than 25% by 2010
7}A major ….. will fold by 2010
A] Retail Chain
C] Car manufacturer
D] All of the above
8} The pound will…. By 2010
A] Rise to 1.95$
B] Rise to 1.80$
C] Rise a little to 1.60$
D] Fall below 1.30$
9}Which country will be best placed to enjoy 2010
10} VAT will rise to … in 2011
If you scored mostly A’s you are expecting a big turnaround in 2009 and some real improvements and plenty of good news. Other mostly A’s include Gordon Brown, The BBC, The Labour Party, and Alan Sugar. A’s are rushing to the shops on Boxing day in the knowledge that these crazy prices can’t last beyond Christmas. A’s are planning on selling their house as soon as possible and buying another bigger one to capitalise on low interest rates. A’s are taking out loans and investing in the stock market before it rises early next year.
If you scored mostly B’s you are expecting a downturn that should be over by the end of 2009, with good things planned for 2010. Other mostly B’s include Alistair Darling, The Guardian The Liberal Democrats and Robert Peston. B’s are looking for bargains in the shops and on line, whilst scaling back on their holidays because of the exchange rates. B’s are looking to put an extension on the house while there are plenty of cheap builders about.B’s are thinking about putting savings into government bonds.
If you scored mostly C’s you haven’t much hope of anything more than a few green shoots by 2010. Expect a difficult year ahead. Other mostly C’s include David Cameron,
If you scored mostly D’s you are expecting things to get much worse, then a lot worse. Other mostly D’s include HousePrice crash forum, Vladimir Putin, speaker Martin and Bob Quick. Avoid sharp objects and medication this Christmas and get someone else to light the oven.
D’s are investing only in canned goods and primus stoves this season, which they are putting into the motor boats that they bought with the proceeds of their house sale, now just waiting for things to turn really ugly before they cast off from this this island forever.
There wern't to many D's among you were there?
Merry Christmas and an enjoyable holiday to all our readers.
Tuesday, 23 December 2008
Shocked to the bone is all I can say, what a sad story to break over the Christmas period;
Monday, 22 December 2008
UPDATE Tue 4pm: Due to family emergency CU may not be able to attend, ND will do the honours...
Saturday, 20 December 2008
Friday, 19 December 2008
But what I really want is..
And anything else you think I might like or need in the comments
"Mercantilism, which reached its height in the Europe of the seventeenth and eighteenth centuries, was a system of statism which employed economic fallacy to build up a structure of imperial state power, as well as special subsidy and monopolistic privilege to individuals or groups favored by the state. Thus, mercantilism held exports should be encouraged by the government and imports discouraged."
Thursday, 18 December 2008
Of all people in the universe, whom would you most trust to pick industrial winners ? Whose incorruptible neutrality and proven judgement would most be suited to deciding which companies live, and which die ?
Tuesday, 16 December 2008
Or is it just more of a government that is getting through the crisis by taking it one day at a time?
The US has reduced its interest rate to 0.25% or less. The lowest it has ever been. A true test of monetary economic theory. Will it revive the economy? Will it actually kick-off yet another asset bubble ( in gold maybe..)?
Some intriguing snippets of news are leaking out that make for grim reading for shareholders of UK bank stocks. last week the dreadful HBOS announced it losses on corporate loans were in the extreme zone. As such, an analyst has pointed out that the joint HBOS/Lloyds bank will be heavily loss making and is likely to be nationalised next year.
The government too has been making plans, Robert Peston has blogged on some of the key long-term changes being made, in addition I see that the IMF are also suggesting that Government's get more radical in their approach to the credit crisis.
If the Government wants banks to lend more, it will have to give them more money as they are not going into risky business in this environment. More money means either printing it or borrowing from future tax payments. Either way it will mean the Banks too have to give more of their capital to the Government and the taxpayers 'suffer.'
2009; Nationalised Banking, I hope Labour are honest enough to put it in their election manifesto...
Monday, 15 December 2008
Much shock in the press todat that the senior exec at Barclay's could say house prices could fall 30% top to bottom.
As usual, those with a stake in the game are up in arms about this 'talking down' of the situation.
On the other hand, I am surprised that the pretence is still there that prices will remain so high. It is quite likely house prices will fall 50% (and this is for residents, if you wanted to buy a house in euro's or dollars then the price is alrady down over 50%). There are less mortgages, less jobs, less credit, there is less appetite for risk and less money on savings rates to allow people to build up a deposit; the outlook is bleak for the forseeable future.
Anecdotal information from Esate Agents say prices are already down 30% if you actually have to sell and this is before large numbers of foreclosures hit the market next year. Prices are after all what people want to pay, nto what people hope to sell for - a difficulty in doing polls on prices which has yet to be ironed out.
Even a 50% fall leaves prices at the top end of the long-run pricing index at 4.2x average salary.
When average the average house price gets closer to £100,000 than £200,000 will be the time to buy. Currently it stands at a 25% odd margin over this. Still much time to bide therefore...
Sunday, 14 December 2008
Friday, 12 December 2008
IN ONE SINGLE ADJECTIVE HOW WOULD YOU DESCRIBE THE PERFORMANCE OF TODAY'S STRATEGY FOCUS TEAM.I wanted to put "predictable" but settled for "burnishing" as the most misleading I could think of before heading for the exit.
The weekend quiz
IN ONE SINGLE ADJECTIVE HOW WOULD YOU DESCRIBE THE PERFORMANCE OF
I offer...GB Ogreish
In the comments please..
Thursday, 11 December 2008
Every day the pound has weakened this week against the Euro. The Tourist rate is now 1.08.
I Hope no one is planning a holiday abroad. I was in Italy in the summer and the paltry rate then was 1.25 I found the relative costs of meals etc to be the same as in the UK. Now it will feel very expensive to go to Europe indeed.
The Pound may well fall to parity with the Euro and the Dollar in the coming months. IF that came to pass it would really mark a new low never before achieved in history for the UK.
At some point in a Sterling crisis the Bank of England will have to do something; that something is raise rates. However bad the recession and all the economists predictions of 0% rates the reality may well be that we have to hold rates above the Euro-rate and Dollar-rate to defend the Pound.
Why defend the pound you ask? Well, imports, of which we have lots, will become very expensive fueling high inflation, which would necessitate raising rates anyway. The boost to exports from a cheap currency may be welcome, but so far there is not much evidence of this being a boom to the economy. Crucially, for a Government set to borrow billions of pounds, a weak currency will cause a gilts strike as foreigners will demand a huge premium to maintain their investment or will not by the gilts at all; this issue would be negated by a stable currency.
It will be interesting to see the political and economic reaction to this over the coming weeks. below are the 2008 charts for £ vs USD and Euro:
Wednesday, 10 December 2008
The Pre-Budget Report seems a long time ago even now. The UK Government promised to spend our way out of recession, pushing annual government debt to 8% next year (EU guidelines are for 3%, crazy says EU's Trichet).
This huge spending boom and a set of interest rate cuts would see of the worst of the recession (and set the stage for a 2009 election?).
Here we are, not quite a month later and the latest economic forecasts have the economy shrinking at 1% or more in Q4 2009. Why is this so bad; well Darling, my beloved badger of a Chancellor, had said growth for the UK would be .75% for 2009. Well, so far it looks like this:
Q1 at .3%
Q2 at 0%
Q3 at -.3%
Q4 at likely -1%.
Add those up (there are some technical issues that mean this does not quite work, but the gist is near enough) and you get to -1.3%.
That is a huge variance to .75%. It is over 200 basis points out. Each of those is a fall in tax revenue and means more borrowing for the Government.
And so, we will see whether the fiscal stimulus works by mid-2009. The issue is that even if it does, the Government's borrowing forecasts are already shot and we will be even more in debt next year that they planned for. Despite this Brown and Darling criticise the Tories for suggesting we live vaguely within our means. Appalling.
Came home to find Mrs CU frantically 'bidding' on a shopping website for Xmas pressies. On closer inspection this is a genius mathematical scam; who says degrees are not worth every penny.
Basically, you buy 'bids' for 50p from Swoopo, then bid on items like Wii's for say £20. The bid only ends when no one else bids, otherwise more time is added to the 'countdown' clock. In theory you can thus win an item for a 40p bid. Also, every time someone bids the price of the item increases by 8p.
The genius is that every bid makes Swoopo 57p and because of the way the bidding works, it is often the case that they get thousands of bids per item and still sell the item at a discount to retail - but pocketing £1000's for each bid.
I can't see they do anything illegal, except have designed a rigged game that dupes people into thinking they can 'win' cheap goods when in reality there is little or no chance. They don't let you see how many people are bidding to make any kind of informed judgement, So Caveat Emptor here. My other thought is that this is clearly a gambling website and I do hope they pay the gambling taxes and operate under the gaming act like other online gaming companies - they market themselves as entertainment.
Great scam though, wish I'd thought of it!
Tuesday, 9 December 2008
Poor shopper figures in November point the way to a ‘back-to-basics Christmas’
Monday, 8 December 2008
Gold has been the conversation talking point for many investors over the past year. This post is inspired by a conversation at FT Alphaville on the subject. The difficulty with Gold is that the world is filled with 'goldbugs.' These are a set of people who sell gold for a living and write ramping posts or columns to boost the price/demand for Gold.
Against this are arraigned the forces of..well....not many people; there are very few bearish views to be found on Gold which makes for a one sided debate.
And yet Gold has not been an unqualified success this year, even in the most unstable times of my lifetime which would suggest a flight to safety and 'traditional' stores of value. Gold started the year at $800 an ounce and looks like ending it there or thereabouts. It hit $1000 in March (I sold then!) and went as low as $710 (I bought back in at $715). Overall, the performance is much better than equities, down 40% odd compared to Gold's level pegging.
But next year, great things are expected of Gold. The Gold bugs proclaim huge inflation from the 'quantitative easing' (printing money to you and I) now going on in the West. Yet the deflation scenario suggests Gold will not do so well, it may even suffer as it gets dragged down by the end of the commodities bubble (which is after all, what has happened in recent months).
Finally, and most intriguing, is the dark conspiracy theory thrown out by the gold bugs. In a world of fiat currency, Gold is a threat. in the 1930's it was confiscated by US President Roosevelt. There are signs that something is awry, the paper price of Gold is very different to the price quoted if you actually want some delivered. The discrepancy by the conspiracy believers' is that the the Governments of the world are holding down the price by intervening in the paper markets. They are also not printing so many coins as they used to that is for sure.
Normally I am not a great believer in conspiracy theories; but the ramping of gold in the media all this year should have driven the price up more than it has. Deleveraging certainly has pulled it down, but I find it surprising its price has traded in such a narrow band throughout such a stormy market.
Deflation should mean next year is not a 'Golden one;' but my hunch is that the economists will be proven wrong on this and 2009 will be a good year to hold gold. What do you all think?
Sunday, 7 December 2008
Working on my theme of the week, unintended consequences, here is an exclusive to Capitalists@Work. No doubt the media will pick up on this later in the week.
Saturday, 6 December 2008
Friday, 5 December 2008